Norway's Northern Lights Project Pioneers Europe's First Cross-Border Carbon Capture and Storage Service
Key Insights
Northern Lights, a Norwegian government-backed project, is launching Europe's first cross-border carbon capture and storage service for industrial emissions.
The initiative involves capturing CO2 from heavy industries, transporting it by ship, and permanently storing it deep beneath the North Sea.
Backed by Shell, Equinor, and TotalEnergies, the project aims to establish a viable market for industrial decarbonization, leveraging existing oil and gas expertise.
Significant government funding and a competitive pricing model are designed to incentivize industrial participation and accelerate the adoption of CCS technology across Europe.
Northern Lights, a pioneering carbon capture and storage (CCS) project backed by the Norwegian government and a consortium of energy majors including Shell, Equinor, and TotalEnergies, is poised to establish Europe's first cross-border CO2 transport and storage infrastructure. Located on Norway's west coast near Bergen, the facility is designed to receive and sequester industrial carbon dioxide emissions, marking a multi-billion-dollar bet on the future of clean energy in Northern Europe and a new revenue stream for the region's traditional energy sector.
The project’s operational model involves capturing CO2 from industrial sites, such as Heidelberg Materials' cement plant in Brevik, southern Norway. The liquefied carbon dioxide is then transported by specialized vessels to the Oygarden terminal, from where it will be piped approximately 70 miles offshore and injected 8,500 feet into porous rock formations beneath the North Sea. This innovative approach aims to transform Norway's extensive petroleum industry expertise and favorable geology into a scalable service for managing industrial emissions across the continent.
Carbon capture has historically faced hurdles due to high costs and environmental concerns, but Northern Lights is emerging as a model for profitability and scalability. European industries, particularly those in hard-to-abate sectors like cement and fertilizer, are under increasing pressure from emissions taxes and environmental regulations. CCS offers a vital pathway to decarbonization for these businesses, simultaneously creating a new line of business for major oil and gas companies leveraging their existing infrastructure and geological knowledge.
The project's financial viability is significantly bolstered by substantial government backing, with the Norwegian government contributing approximately 34 billion krone ($3.3 billion) to cover two-thirds of the initial costs and a decade of operations. Wood Mackenzie estimates that customers will pay a fee of $50 to $60 per metric ton for CO2 disposal, a competitive rate compared to Europe's carbon tax of around 70 euros per ton. This public investment is explicitly designed to “kick-start a market for CCS in Europe,” as stated by Alexander Engh, deputy director general of Norway’s energy ministry.
While the project owners, including Shell, anticipate profits of around 10%, the high costs associated with capturing the CO2 at the source, which can range up to $400 per ton depending on the industrial process, mean that the overall solution still requires subsidies. For instance, Heidelberg Materials' low-carbon cement, Evozero, is estimated to cost three times that of ordinary cement, despite being physically identical. However, the order book for Evozero is already sold out for the year, indicating a strong market demand for greener industrial products. The International Energy Agency's Carl Greenfield highlighted a recent £8 billion debt financing deal for two UK CCS projects as a significant milestone, underscoring growing financial sector confidence in the technology. With an estimated 80 billion metric tons of CO2 storage capacity under Norway’s seabed, Northern Lights is positioned to become a cornerstone of Europe's decarbonization strategy.